Best Buy same-store sales drop again in December

Top U.S. consumer electronics chain Best Buy Co's December same-store sales fell 4 percent as bargain-hungry shoppers turned more to such rivals as Target Corp .

Still, the decline Best Buy reported on Friday at stores open at least 14 months was not as bad as the 6 percent drop analysts had feared after previous market share losses. The company's shares were unchanged in morning trading.

I take this as a positive data point, said Fifth Third Asset Management portfolio manager Ted Moore, whose firm owns the stock. They've had some disappointment recently, and this is a step toward rebuilding investor confidence.

Consumer electronics retailing is competitive. Industry sales rose only 1.5 percent in December, largely because of lower price tags on televisions, according to MasterCard Advisors' SpendingPulse.

Target, who took the early holiday share over Black Friday weekend, quickly saw the gains dissipate as they reined in these aggressive promotions, Janney Capital Markets analyst David Strasser said in a research note. We believe the year-end market share results will show some modest losses at Best Buy, but hardly anything indicative of a structural issue.

In Best Buy's U.S. business, sales were down 5 percent, matching the decline seen in the third quarter, while they slipped 0.1 percent internationally. Moore said Wall Street's overall estimate suggested analysts were expecting a drop of about 7 percent in the United States.

The company blamed weak demand for entertainment software and televisions in the U.S. segment, while the decline internationally was mostly due to softness in Canada.

In the United States, same-store sales of entertainment software slid 15.4 percent, mostly on declines for videogames. Best Buy also cited weakness in music and movies.

The consumer electronics category saw a 7.9 percent decline, including a low double-digit drop in demand for TVs.

TV makers have not given up hope that they can lure shoppers back to showrooms, however, as major producers such as Samsung Electronics Co <005930.KS>, LG Electronics Inc <066570.KS> and Sony Corp <6758.T> all showed improved versions of 3D and smart sets at the Consumer Electronics Show.

The company started promotions earlier, hired more telephone agents and kept stores open for longer hours than usual for this past holiday season. It held special promotional events on smartphones and hosted private shopping sessions and movie screenings for loyalty club members.

After a decision to focus on promoting pricier 3D TVs backfired, Best Buy acknowledged its misstep by advertising cheaper sets later in the season.